Should RIM Team-Up With Microsoft For Selling Its Network Division?

It’s correct, whatever is happening with RIM this time isn’t fair. Last week, the company reported its Q1 earnings for fiscal 2013 and it was another dismal quarter for the company. In May of this year, RIM instructed to its shareholders that they could meet a disappointing earnings in the first fiscal quarter. However, Wall Street predicted revenue of $3.1 billion and net loss per share as $0.03, but the company delivered revenue of $2.8 billion and net loss of $0.37 per share. On Thursday last week, company’s market valuation reached to $4.1 billion, plunged 18% in extending trading and stock dropped by 70% compare to the last year.

At present, the company isn’t at the stage to standalone its two divisions– networking and hardware–together. Reuters has recently reported that RIM is considering to sell its network business to Microsoft. The company’s CEO has confirmed at the conference call the new generation OS (BlackBerry 10) would be launched in the first quarter of next year.

However, if RIM will once team up with Microsoft, then obviously, the world’s largest software giant will force it to adopt Windows phone platform and abandon its own BlackBerry OS. It would be the partnership like Microsoft and Nokia Ovj. Nokia is currently using Microsoft’s Windows Phone OS in its Smartphone and has also decided to launch Windows 8 powered 10-inch Tablet later this year.

RIM has clarified all speculations and explained that the company will firstly launch a full -fledged touch screen BlackBerry 10 devices and then it will be followed by QWERTY Smartphones shortly. RIM sold 7.8 million BlackBerry Smartphone during the first quarter of fiscal 2013, down 41% compare to the same quarter of the prior year.

I think, RIM will not look for Microsoft to buy stake in the company, the reason is quite obvious, if it will do so, then there is chance that it could lose its independence. At this time, even board of the company is preferring to develop new OS. It’s pretty known, for RIM, its network is an asset and it’s very tough for the company to rescue it without handset division and vice- versa (without network, it’s also difficult to save handset division). Clearly, handset and networking division of the company are interdependent to each other.

In the market, RIM is known for its integrated hardware, software and service offering. The company has made its recognition among enterprise for secure mobile emailing.

Microsoft could be interested to acquire RIM’s wireless patent. One thing that RIM could do, such as it could offer highly secured emails and other services to company and government agencies. But, it’s not easy for the company to draw an attention of consumers just by its networking without hardware. On the other hand, the company is facing an fierce competition from Apple and Google in the mobile segment.

A month before, RIM hired to investment bankers (JPMorgan and Royal Bank Of Canada) for the strategic review. It’s well known that RIM has still faith in its integrated model and it has denied the speculation which blamed that it could adopt Android OS in coming future. Last month, RIM announced to slash 5,000 jobs , which is expected to save $300 million in the fiscal. Beside, it has decided to reduce $1 billion from its operating cost this year.

Anyway, RIM has still penetration among corporate clients; they are still relying on its encrypted email messaging. They are little bit precautious to adopt Android platform due to security vulnerability and fragmentation. However, leveraging over RIM’s outage, Apple has succeeded to manage large portion of the Canadian handset manufacturer’s market share.

RIM’s market share has been declined due to its lack of sincerity towards hardware and software updates. Apple revolutionized the concept of Smartphone by launching full-fledged touch screen (in 2007) and App store, whereas, RIM never focused about these stuffs. Microsoft is trying to team up with RIM in order to contend Apple and Google in the market.

I am little skeptic, and I think the relationship could not bring any extraordinary for RIM. Microsoft’s Windows Phone is still struggling to prove itself in the market and Windows 8 has yet to get recognition. However, Microsoft’s relation with Nokia has not benefit yet to the Finnish handset manufacturer.